J. McLaughlin, the classic, preppy brand with quaint shops popping up on America’s Main Streets, has been sold to a private equity group, WWD has learned.
The group, led by JH Partners and the Highland Consumer Fund, acquired a majority stake in the business. Jay and Kevin McLaughlin, the brothers who founded J. McLaughlin 34 years ago, as well as the chief executive officer Steven Siegler, retained a minority interest and will continue in their same roles at the company.
The deal, completed Monday, values J. McLaughlin at $80 million, according to sources. J. McLaughlin operates 53 stores and a Web site, and will exceed $40 million in volume this year.
On the day after the deal closed, the McLaughlins explained why they decided to sell the company they were so strongly identified with. “We have always reinvested profits back into the business. We felt it was the right time to take a little bit off the table and have a little less financial responsibility,” said Jay McLaughlin, the chief merchandising officer.
“After 34 years of work, it was time to monetize and get a bigger platform for our efforts,” added Kevin McLaughlin, chief creative officer. “We’ve grown nicely over the last few years but the growth has always been organic, self-financed and with limitations. With the right partners now, we can accelerate that.”
Selling the company, he acknowledged, felt bittersweet, though he added: “It feels like the right thing to do. It’s appropriate.”
JH Partners investments have included Peet’s Coffee & Tea, Bare Escentuals, Frette, La Perla and Design Within Reach. Highland Consumer Fund has investments in Lululemon, Pinkberry and City Sports. Peter J. Solomon advised J. McLaughlin on the sale.
“J. McLaughlin’s unique approach to retailing, differentiated merchandise, neighborhood stores and high-touch customer service appeals to consumers in a way we have not seen before,” said Jeff Hansen of JH Partners, who will join the J. McLaughlin board. Tom Stemberg, managing partner of Highland Consumer Fund and founder and former ceo of Staples, said J. McLaughlin has “significant opportunity for continued expansion.”
According to Siegler, the deal brings J. McLaughlin to “the next stage of development” and enables the company “to focus on areas where we’ve been unable to, because of our lack of experience or lack of capital. As fast changing as the world is, we need to keep up with it.” Building up its logistics and systems to support growth, and becoming more committed to social media, e-commerce and marketing will be new priorities, he said. “The one thing we definitely don’t want to change is the customer experience and expectations as we grow,” Siegler said, referring to the brand’s DNA and the signature tradition-with-a-flair style. J. McLaughlin is known for its timeless bright prints, hand-quilted jackets and colorful Catalina T-shirts, among other items.
Forty percent of the product is produced at the McLaughlins’ 40,000-square-foot factory in Brooklyn, N.Y., which generates between 2,000 and 3,000 styles a year, mostly cut-and-sewn garments. The facility houses the administrative offices, a photo studio, the print library, a fabric warehouse, and operations for product development, design, merchandising, merchandise planning, IT and distribution. The factory has the capacity to triple output. The rest of the product is manufactured in Europe and Asia.
“We are not going to change the business model,” said Kevin McLaughlin. “We will enhance it. Our strength is classic retailing, conceiving a product, manufacturing it and selling it. That’s our core competency. That simple, basic form of retailing, we do a good job with that. But the world of retailing is evolving very quickly right now. The marketing and media side has been a limitation. People who know this brand love it, but not that many people know this brand. If you could get it in front of more people via increased store count or e-commerce, there is a big opportunity.”
Jay McLaughlin added, “If Fair Isle sweaters were coming back next year, that’s something we would sense. We live and breathe that stuff. We have always loved the product and understood the brand we were building. We never veered off the formula. We talk about tweaking but it’s always in the parameters of what McLaughlin is about.”
The company plans 10 to 15 openings next year, though under new ownership, the expansion might ramp up to 15 to 20 sites in 2013, and possibility more thereafter, but not necessarily, Jay McLaughlin said. “They want us to run the business just the way we have been running it. They are not telling us we need 20 or 30 stores. They ask, ‘What is the comfort level?’”
The McLaughlins have cited the potential to ultimately open 300 stores in the U.S., which seems plausible because several major markets have not been touched. Expansion has mostly been contained to the East Coast. There are no stores in California or Texas yet, and stores will soon open for the first time in Atlanta. The McLaughlins seek buildings with character on street locations, occasionally open in lifestyle centers, and shun malls. “Frankly, the mall atmosphere diminishes the brand,” said Kevin McLaughlin.
For about two years, the McLaughlins had contemplated selling a majority stake. “It’s something you go back and forth on, but I am excited now that everything has been pulled together,” said Jay McLaughlin. “I think it’s going to be best for J. McLaughlin and I look forward to seeing it to the next level. We will work just as hard to get to the next level. We still have a monetary interest in the business. In four or five years, as the company grows, there will hopefully be another opportunity” to sell again.
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)